The Wells Fargo/Gallup Small Business Index for the third quarter shows the highest optimism score for small business owners in five years.

Entrepreneurs are generally more enthusiastic about the economy, they are finding easier access to credit, and have a greater willingness to hire, the index shows, putting it in line with other studies that have demonstrated an improving picture for small businesses. At the same time, though, the data in the Wells index are mixed, particularly when it comes to revenue and hiring.

"It is a better reading than we've had in five years, and it takes us back to before Lehman collapsed, but the small business recovery is very much a work in progress," says Mark Vitner, a senior economist at Wells Fargo.

The composite index score for the third quarter rose to 25, an eight point increase from the third quarter of 2012, and 9 points from the second quarter of this year. That's the highest it has been since the third quarter of 2008, when the index score was 45, but it's still far from highs of between 80 and 100 or higher that were notched between 2003 and 2007.

Current Financial Picture

When asked to rate their current financial situation, 56 percent of respondents said it was either good or very good, a three percentage increase from the same period a year ago, and a two-percentage point decrease from the second quarter. But more small business owners--25 percent compared to 23 percent in the second quarter--rated their financial situations today as either poor or very poor.

When it comes to financing their businesses, the news was generally good.

Twenty-five percent of owners surveyed reported it was either difficult or somewhat difficult to obtain credit in the past 12 months, a decrease of eight percentage points from the same period in 2012, and a five-percentage point decrease compared to the second quarter. Twenty-two percent said it was either very easy or somewhat easy to obtain credit, a two percentage point decrease from the same quarter a year ago, but a two percentage point increase compared to the second quarter.

Going-forward, 30 percent said it would be either somewhat or very difficult to obtain credit in the next 12 months, a six percentage point decrease from the second quarter. And 28 percent said it would be easy or very easy, a four percentage point increase over the second quarter, but only a one point increase from the same period a year ago.

"Banks have been more aggressive in wanting to make loans to small businesses, but businesses don't want to borrow if they are worried about top-line revenue," Vitner says.

Two Views on Hiring

Hiring data were more mixed, with 14 percent of small business owners saying they had increased the number of positions at their companies in the third quarter, flat from the same period a year ago, and an increase of three percentage points over the prior quarter. Similarly, 18 percent said they decreased jobs, down three percentage points from a year ago, and down five percentage points from the second quarter.

However, in the next year 18 percent said they would add more jobs, down from 20 percent from the year ago quarter and the second quarter of 2012. Twelve percent said they'd decrease positions, up two points from 2012 but down two points from the previous quarter.

The picture that emerged on company revenue was also somewhat gloomy. Thirty-three percent said revenue had increased, a four-percentage point drop from the previous quarter, while thirty-nine percent said it had decreased, an increase of one percentage point compared to the second quarter. Year over year, that represents an increase of two percentage points for companies reporting increased revenue, and an increase of one percentage point for companies reporting decreasing revenue.

What to Watch for

The headwinds to watch going forward, Vitner says, include rising interest rates later this year, expenses related to the rollout of the Affordable Care Act, and worries about a fiscal crisis provoked by the budgetary showdown in Congress.

"If sales are improving, confidence will improve, but if sales take a hit because the budgets talks blow up and we have more uncertainty, that may give us more of a setback," Vitner says.

Wells Fargo, which partners with Gallup for the survey, conducted telephone interviews with 610 small business owners in late July. The business owners averaged about $1 million to $3 million in annual revenue but go as high as $20 million, Wells Fargo says.